Correlation Between Embraer SA and Hexcel
Can any of the company-specific risk be diversified away by investing in both Embraer SA and Hexcel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Embraer SA and Hexcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embraer SA ADR and Hexcel, you can compare the effects of market volatilities on Embraer SA and Hexcel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Embraer SA with a short position of Hexcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embraer SA and Hexcel.
Diversification Opportunities for Embraer SA and Hexcel
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Embraer and Hexcel is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Embraer SA ADR and Hexcel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel and Embraer SA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Embraer SA ADR are associated (or correlated) with Hexcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel has no effect on the direction of Embraer SA i.e., Embraer SA and Hexcel go up and down completely randomly.
Pair Corralation between Embraer SA and Hexcel
Considering the 90-day investment horizon Embraer SA ADR is expected to generate 1.69 times more return on investment than Hexcel. However, Embraer SA is 1.69 times more volatile than Hexcel. It trades about 0.19 of its potential returns per unit of risk. Hexcel is currently generating about 0.11 per unit of risk. If you would invest 3,419 in Embraer SA ADR on August 31, 2024 and sell it today you would earn a total of 401.00 from holding Embraer SA ADR or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embraer SA ADR vs. Hexcel
Performance |
| Timeline |
| Embraer SA ADR |
| Hexcel |
Embraer SA and Hexcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embraer SA and Hexcel
The main advantage of trading using opposite Embraer SA and Hexcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embraer SA position performs unexpectedly, Hexcel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hexcel will offset losses from the drop in Hexcel's long position.| Embraer SA vs. HEICO | Embraer SA vs. Vertical Aerospace | Embraer SA vs. Rolls Royce Holdings plc | Embraer SA vs. Rocket Lab USA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |